Correlation Between Overstockcom and PDD Holdings

Can any of the company-specific risk be diversified away by investing in both Overstockcom and PDD Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Overstockcom and PDD Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Overstockcom and PDD Holdings, you can compare the effects of market volatilities on Overstockcom and PDD Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Overstockcom with a short position of PDD Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overstockcom and PDD Holdings.

Diversification Opportunities for Overstockcom and PDD Holdings

0.0

Correlation Coefficient

Overstockcom  PDD Holdings

Pay attention - limited upside

The 3 months correlation between Overstockcom and PDD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Overstockcom and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and Overstockcom is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Overstockcom are associated (or correlated) with PDD Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDD Holdings has no effect on the direction of Overstockcom i.e., Overstockcom and PDD Holdings go up and down completely randomly.

Pair Corralation between Overstockcom and PDD Holdings

If you would invest  11,088  in PDD Holdings on November 28, 2024 and sell it today you would earn a total of  1,191  from holding PDD Holdings or generate 10.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Overstockcom  vs.  PDD Holdings

Overstockcom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Overstockcom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Overstockcom is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

PDD Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PDD Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, PDD Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Overstockcom and PDD Holdings

The main advantage of trading using opposite Overstockcom and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overstockcom position performs unexpectedly, PDD Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PDD Holdings will offset losses from the drop in PDD Holdings' long position.

The idea behind Overstockcom and PDD Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.